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Liberals write off $200 million in student loans feds will never collect

Prime Minister Justin Trudeau listens to a question from a student at American University, Friday, March 11, 2016 in Washington. (Paul Chiasson / THE CANADIAN PRESS)

The Canadian Press
Published Friday, February 16, 2018 10:47AM EST

OTTAWA -- The federal government is writing off more than $200 million in outstanding student loan payments that officials will never be able to collect.

Recently released spending documents show the government won't collect $203.5 million in debts from 34,240 students.

It is the third time in the last four years that the government has had to write off outstanding student loans even as officials make concerted efforts to round up more money from borrowers.

The government annually has to write off some of the $19 billion owing in student loans for a number of reasons: a debtor may file for bankruptcy, the debt itself passes a six-year legal limit on collection, or the debtor can't be found.

The Liberals have looked to make it easier for graduates to pay off their loans -- and the government to collect the cash -- by increasing the minimum annual income they have to make before they are required to make debt payments.

The limit is now set at $25,000.

The most recent annual report on the Canada Student Loans Program said that in the 2014-2015 fiscal year, the government provided 489,000 full-time students with $2.7 billion in loans and a further $20.9 million in loans to 12,100 part-time students.

Borrowers typically take between nine and 15 years to fully pay off their loan and the period usually overlaps with when Canadians are most likely to start a family.

The Canadian Alliance of Student Associations called on the government late last month to also give new parents a break from student loan payments when they are on parental leave, even if they are receiving employment insurance benefits.

Student groups have also asked the Liberals to make higher education more affordable, including requests to provide more financial help to Indigenous students.